Lawyers for consumers who filed the 2005 complaint won
permission to conduct limited questioning of Jobs, under an
order issued yesterday by U.S. Magistrate Judge Howard R. Lloyd
in San Jose, California. The deposition can’t exceed two hours
and the only topic allowed is changes Apple made to its software
in October 2004 that rendered digital music files engineered by
RealNetworks Inc. inoperable with Apple’s iPod music player.

“The court finds that Jobs has unique, non-repetitive,
firsthand knowledge about the issues at the center of the
dispute over RealNetworks software,” Lloyd wrote.

ITunes customer Thomas Slattery sued Apple in 2005 seeking
class-action status on behalf of consumers claiming the company
illegally limited consumer choice by linking the iPod to its
iTunes music store.

In 2008, Apple agreed to lower prices on iTunes tracks sold
in the U.K. as a result of a European Union Competition
Commission inquiry begun in 2005. Apple faced inquiries from
regulators in Norway, Sweden and Denmark over complaints that
songs sold on iTunes were incompatible with music players other
than the iPod.

In May 2010, the U.S. Justice Department’s antitrust
division was making preliminary inquiries into Apple’s business
practices regarding iTunes, two people familiar with the matter
said at the time.

Biggest Music Retailer

Apple surpassed Wal-Mart Stores Inc. as the biggest music
retailer in April 2008. Apple offers more than 14 million songs
through the iTunes store, which it opened in April 2003.

Slattery asserted antitrust claims allegedly arising from
Apple encoding its digital music files with proprietary software
called FairPlay. This allowed music files purchased from the
iTunes Store to be played only on iPods, and not using products
by other manufacturers. FairPlay also prevented digital music
sold by other companies’ online stores from being played on
iPods, according to the complaint.

RealNetworks, Harmony

RealNetworks, a Seattle-based competitor in the digital-music market, announced July 24, 2004, that it would sell music
from its online store that could be played on iPods on a
technology it called Harmony. Just five days later, Apple
announced software updates to its iPod FairPlay software that
would render RealNetworks’ Harmony product again inoperable on
iPods, according to Lloyd’s order.

By October 2004, when users were forced to update their
iTunes applications and iPods, the digital-music files from
RealNetworks’ online store were no longer usable with Apple’s
iPods, Lloyd wrote.

By March 2009, all digital music files sold on iTunes were
sold without proprietary software, according to a footnote in
the court order.

Lloyd rejected plaintiff requests to allow broader
questioning of Jobs about Apple’s refusal to license FairPlay
technology to other companies or its decision to use the
technology on music purchased from iTunes and the iPod.

‘Remaining Claims’

Both of those issues were dismissed from the litigation in
December 2009 by U.S. District Judge James Ware, Lloyd said.

“Plaintiffs remaining claims rely on the allegation that
Apple attempted to maintain a monopoly in the audio download and
portable music player markets by issuing updates to FairPlay,
Apple’s proprietary digital rights management software,” David
Kiernan, an attorney for Apple, wrote in a December court
filing.

Kiernan also argued that “any deposition of Mr. Jobs would
be repetitive, at best.”

Jobs took a medical leave from the company starting Jan.
17. The 56-year-old CEO, who has battled a rare form of cancer,
has taken time off for medical reasons three times in the past
seven years.

“We have not yet scheduled a deposition,” Bonny E.
Sweeney, a San Diego lawyer representing plaintiffs in the case,
said today in a phone interview.

Motion to Dismiss

A hearing on Apple’s motion to dismiss the case is
scheduled for April 18, she said. Case filings over the last two
weeks related to that motion are sealed from public view,
according to an electronic docket.

Sweeney confirmed that while portions of the case have been
dismissed, there are still active claims by consumers and
business purchasers of iPods alleging that Apple maintained a
monopoly on music download capabilities for the iPod from
October 2004 to March 2009.

“In 2004 Apple took steps that excluded potential rivals
from the market and that served to maintain its monopoly in the
digital portable player market,” Sweeney said.

Apple rose $1.50 to $340.80 at 3:12 p.m. in Nasdaq stock
market trading in New York.

The case is Apple iPod, iTunes Antitrust Litigation, C05-0037JW, U.S. District Court, Northern District of California
(San Jose).

To contact the reporters on this story:
Pamela MacLean in U.S. District Court, Northern District of
California in San Francisco;
Karen Gullo in San Francisco at
kgullo@bloomberg.net.